MIGRANT WORKERS ARE BECOMING MORE IMPORTANT. WHAT DOES THIS MEAN FOR BUSINESS SECTORS?

15th July 2022

Malaysia has been a key destination country for migrants from Southeast Asia, South Asia, the Middle East, and Africa due to its resources and strategic location. The majority of migrants come to Malaysia for economic reasons, but a significant number of irregular and vulnerable migrants seek sanctuary from violence, persecution, and abuses in their native countries. Malaysia is also known as a transit and destination country for human trafficking and migrant smuggling, with migrants frequently falling prey to unscrupulous recruiters, leaving them trapped and in the stat of being an illegal.

Malaysia's government officials predicted that the country welcomed 1.4 to 2 million documented migrants between 2018 and 2020, with unconfirmed estimates of 1.2 to 3.5 million more migrants (as reported by the World Bank) – making it Southeast Asia's largest migrant-receiving country. Migrant labourers come from Indonesia, Bangladesh, Nepal, Myanmar, India, Cambodia, and Lao PDR in smaller numbers. They work in industries such as manufacturing, plantation, agricultural, services (hospitality and security), and domestic work. Labour migrants in these corridors are important contributors to the economy of both Malaysia and their home countries, accounting for over 20% of the Malaysian workforce (ILO) and occupying much of the low-skilled and semi-skilled employment positions in the country. Regular migrants' presence also forces their employers to contribute to government health and insurance programs, which maintain social safety measures and provide other types of advantages to the Malaysian economy.

Migrants are not spread evenly throughout the economy. There are significant disparities in the presence of migrants across sectors, with a notable overrepresentation in service sectors with high proportions of lower-skilled employees. While migrants are most common in industries with a high proportion of workers in low-skilled jobs, they are also overrepresented in high-skilled jobs in these industries, with agriculture being an exception.

Despite their widespread presence in the labour market, migrant workers' contribution to meeting the demand for low-skilled workers has not been widely acknowledged (with a few exceptions, such as in domestic work). For many years, goals have been defined and strategies implemented to eliminate migrant worker dependency. Changing the composition of the labour force, on the other hand, is challenging, with companies reporting significant shortages in several industries when more restrictive rules were implemented. Migrant workers have long been portrayed as a potential threat to national security and a hindrance to the country's long-term social and economic growth in political and popular debates. As evidenced by the authority granted to the Ministry of Home Affairs over migration concerns, Malaysian labour migration policy has tended to be framed primarily from the premise of regulating immigration and preserving public safety rather than labour administration.

The Malaysian Employers Federation (MEF) has previously stated that there was an urgent need to address the country's labour shortage, which was aggravated by delays in migrant worker recruiting applications. The rapid rate of economic globalisation has resulted in the emergence of foreign workers, with millions of these individuals and their families seeking work in nations other than their own. Some countries with labour shortages import both skilled and unskilled workers to fill gaps in their labour pools. Many of these migrant workers work as labourers in the construction and plantation industries, as well as in restaurants and as domestic staff.

In Malaysia, migrant labourers make up a large portion of the workforce. Malaysia has become Asia's top labour importer, bringing in over a million workers from Indonesia, the Philippines, Bangladesh, and Pakistan. Indonesia, India, Bangladesh, and Nepal provide the majority of the workers. Migrant workers account for roughly 20% of the overall workforce in these nations. Despite a recent trend in Malaysia of restricting migrant workers and hiring local labourers, migrant workers continue to flood the country. Migrant-sending countries benefit from remittances sent home by migrants to their families, as these funds contribute to the economies of their respective countries.

In addition, the rapid expansion of the manufacturing sector raised the demand for labour in a variety of industries, including textiles, electrical items, and electronics. In the culinary, furniture, and metal fabrication industries, there was also a fast increase in small and medium-sized businesses. The demand for trained and semi-skilled workers has increased as a result of these industries. Migrant labour compensates for these industries' "shortages."

It's critical to put more emphasis on migrant worker management. Migrants come from a foreign culture and bring with them new beliefs and norms. As a result, someone who prefers stability and traditional culture might see immigration as a challenge to the status quo. Conservatives are likely to harbour negative sentiments regarding out-group migrants and, as a result, undervalue their potential. Similarly, a manager with conservative values may hold a negative attitude towards migrants, viewing them as a threat to the current societal and organisational order as well as common culture.

Migrant workers are frequently over-represented in the informal economy, which is marked by ill-treatment, trafficking, and smuggling, as well as social dumping, which entrenches inequalities, including gender inequality. They are frequently unprotected by national labour laws and may face poor and dangerous working conditions, low wages, insufficient health care, and inadequate housing. Social protection may be denied in law or practice, putting them at risk of falling into poverty when they return home, especially if they are injured on the job.

Migrant workers, particularly those in irregular situations, might endure discrimination and denial of basic services, including access to health and education for their children. Other human rights issues raised by the rise in temporary labour migration schemes include freedom of organisation and collective bargaining, non-discrimination, and equal treatment. Migrant workers do not have equal rights or access to court and non-judicial remedies for rights abuses, which is a severe concern. It is critical to invest in education and skills training so that lower-skilled migrant workers can earn more money abroad, and measures should be taken to improve access to debt management, investment, and asset diversification information and training to help remittance-dependent households achieve financial independence.

Migrant Workers' Financial Management Should Be A Priority

Acquisitions of high-potential technology payment companies, including alliances and joint ventures, have been at the forefront for various enterprises that need to accelerate their digital agendas in a short time frame. The pandemic's consequences may hasten this process even more. Banks have realised that building online payment goods and services is not only a nice to have but a must-have. They may have some digital infrastructure, but traditional banks' structures are often complex and out of step with market demands. The correct collaborations could be the difference between these institutions succeeding or failing. There is a need to offer migrant workers a tool to help them manage their finances better.

EVOLET is an E-Wallet in Malaysia that provides companies with secure income administration and migratory workers with financial access, control, and savings on essential needs. EVOLET creates financial accessibility for the unbanked. In Malaysia, the majority of unbanked migrant laborers receive their pay in cash. The risk of theft is significant, and there are issues with safekeeping, as well as the difficulty of proving payroll data. Employers have a safety concern about paying employees with cash. EVOLET creates financial accessibility for the unbanked while also negating employers' worries about paying in cash.

EVOLET is a digital wallet app for migrant workers.

Learn more at https://evolet.io/